Negative gearing never became a big issue during the recent elections as Labor’s measures to combat this tax-avoidance pathway, by confining it to new homes, was limited by a “grandfather” clause. The clause allowed the continuation of arranged losses by investors on residential properties to offset the tax on their income derived from other, more profitable sources.
Negative gearing is dividing the nation. Billions of dollars are lost to the government annually by this crude tax-avoidance measure, first home buyers are outbid at auctions by investors encouraged by conservative governments to buy established homes for rental purposes. This enables governments to reduce public housing stock, adding to the long waiting time for potential tenants, many of whom cannot afford commercial rents.
Like an episode from past class-divided societies, wealth inheritance of property is growing rapidly, encouraged by governments pandering to a voter base of privileged tax avoiders.
Keith McEwan, CLA member, Bonython ACT